Following in the wake of breaking news that the SEC had charged the founder of decentralized cryptocurrency exchange EtherDelta with operating an unregistered securities exchange, Covesting’s CEO Dmitrij Pruglo shared some insightful comments ahead of his platform’s upcoming soft launch, regarding the future of the cryptocurrency industry. According to the Covesting founder, the SEC’s move to file charges against EtherDelta founder Zachary Coburn, while unprecedented, was both predictable and expected.

Obtaining a license and becoming registered with a financial regulator is a difficult and tedious process, and the requirements exchange stakeholders are faced with are intimidating and often deter them from attempting to obtain such licenses. Many companies fail to meet certain infrastructure or security requirements, and lack the capital to make an investment toward raising operational standards. Other times, they prefer to avoid oversight from financial regulators completely, often to their own peril.

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Those days are coming to an end, according to Dmitrij Pruglo, who says that taking steps to become regulated will soon become “necessary” for any and all exchanges seeking to offer digital currencies. The news of the SEC’s crackdown on EtherDelta is further proof the Covesting CEO’s comments will ring true in the coming months.

In today’s example, the SEC has charged Zachary Coburn, the founder of decentralized token trading platform EtherDelta, with operating an unregistered securities exchange. The unprecedented enforcement action was the first instance of the SEC accusing a cryptocurrency exchange of offering securities unlawfully. According to the SEC’s order, EtherDelta is a secondary market for trading ERC20 tokens – a type of Ethereum-based cryptocurrency token commonly issued by companies as part of ICOs.

“Receiving a license and welcoming regulation is a huge step towards the formation of the crypto-community of the future, but can be an expensive strategy for exchanges whose owners want to make the greatest and fastest profit with minimal effort, while not bearing any responsibility to customers. Regulator oversight involves added daily operational work for exchanges like Covesting, as well as increased accountability and full transparency. In our own experience, as one of the first platforms in the world received DLT license, we can say with confidence that there is almost no aspect of operations that is not regulated by GFSC. But thanks to this, our customers can be absolutely certain about the legitimacy of operations,” Pruglo said in a statement.

Covesting, who is ready to debut the soft launch of its cutting-edge trading platform, was among the first companies in the world to receive a DLT license from the GFSC. Receiving such a license sends a clear message to investors that Covesting is raising standards across the cryptocurrency industry. Obtaining a DLT license confirms that an exchange is fully compliant, boasts strong operational infrastructure and security standards, and that the company leadership has the expertise required to keep customer assets safe and secure. Such a license also allows exchanges to offer fiat gateways, among many other key benefits a licensed exchange’s customers can expect and enjoy.

Regulation is quickly becoming a significant operational aspect even for decentralized exchanges, in spite of the fact that this seemingly contradicts the very concept of ​​decentralization. Recently, IDEX, one of the world’s decentralized exchanges, transitioned to a full verification model. The move comes days after the platform began excluding residents of New York state as part of its compliance efforts. This measure was called “pragmatic decentralization”. Explaining its transition to a full KYC model, IDEX wrote: “Decentralization exists on a spectrum, and unless your system or application lacks any centralized parts it can be subject to regulation {…} in order to comply with sanctions and money laundering laws.”

“The crypto market is already on its way to settling firmly on a new, fully-regulated base, and all market players, who do not want to play by the new rules, will inevitably sink into oblivion,” – Pruglo, CEO of Covesting, warned.

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